Metro Brokers Financial

Home Appraisal Basics

Appraisals are an important part of the home buying process. A real estate appraisal helps to establish a property's market value (i.e., the sales price it would be listed at if the lender had to put it on the market immediately to resell it).

Lenders require an appraisal when you request a loan to purchase a home or other real estate. The purpose of the appraisal is to make sure that the property will sell for at least the amount of money that is being borrowed.

Home buyers shouldn’t confuse an appraisal with a comparative market analysis (CMA). While real estate agents use CMAs to help home sellers determine a realistic asking price, the appraiser's report is much more detailed. It’s also the only report a bank will consider when deciding whether or not to lend the money.

About Appraisers and Appraisals

In Georgia, appraisers must be licensed by the state due to the Real Estate Appraiser Licensing and Certification Act of 1991. This act regulates the actions of real estate appraisers in their business dealings with the public. Generally, the act requires appraisers to meet certain standards in order to conduct business and prohibits a wide variety of unfair trade practices.

In addition, appraisers must complete unique education requirements and pass a state-sponsored examination before receiving their license.

The lender is subject to the new HVCC laws, which require the appraiser to be selected, at random, through a non-interested third party appraisal management firm. All mortgage lenders must follow the HVCC rules for ordering appraisals on all types of residential mortgage transactions in the United States.

All appraisals will have some cost associated with them, and the cost will be included with the loan application.

The Appraisal Report

Appraisals are very detailed reports and should be looked over carefully. If you have any questions, speak with your Metro Brokers Financial loan officer. Here are a few items included on the report:

  • Details about your property and side-by-side comparisons of three or more similar properties that have sold and closed.
  • Explanations about issues that may be considered harmful to the property's value, such as a major interstate near the property.
  • Any critical flaws, such as large cracks in the foundation.
  • An estimate of the average sales time for the property.
  • The type of area where the home is located (i.e., a subdivision, acreage, etc.).
  • An evaluation of the overall real estate market in the area.

Appraisal ≠ Home Inspection

Appraisals should never be confused with home inspections. An appraiser makes notations about problems they may easily come across, however, it’s still not a home inspection. Remember, an appraiser does not look at the roof, chimney or appliances among other things. Their job is not to determine if the home is in good condition, it is to come up with the value of the home.

If the Appraisal Comes in Low

Remember that even if an appraisal comes in low, your Metro Brokers Financial representative will help you through steps to take to make the deal work. If an appraisal uncovers other problems, keep in mind that most problems are correctable. Your Metro Brokers Financial loan officer will help you work through the issues one step at a time.

Metro Brokers Financial, Inc., 5775-D Glenridge Drive, Suite 200, Atlanta, Ga. 30328 A Georgia Residential Mortgage Licensee # 5892. NMLSR Unique Identifier # 163853. 404-847-2525